Property Tax Resources

In Michigan, the property tax valuation standard is true cash value (“TCV”), statutorily defined as “usual selling price” (MCL 211.27). There are no exceptions. The valuation standard applies to all taxable property including, for example, apartment complexes, office buildings, shopping centers, single family homes and the subject of this article: “big box retail stores.” As used in this article, big box retail store means the real property comprising an existing free standing retail store with a building area of approximately 80,000 square feet or more.

The Constitution requires assessments to be made on property at its cash value. This means not only what may be put to valuable uses, but what has a recognizable pecuniary value inherent in itself, and not enhanced or diminished according to the person who owns or uses it. [Emphasis in original.]

Before a big box store’s usual selling price can be concluded, the identity of the interest in the property being appraised must be identified. Different interests in any given property can have significantly different values. Paraphrasing well-known author and real property appraiser David Lennhoff, “you can’t get the right value unless you value the right rights.”

This article focuses specifically on owner-occupied big box stores. Because the properties are owner-occupied, there is no lease in place and no leased fee interest. TCV for owner-occupied property is based on the fee simple interest in the property. Fee simple interest is defined as follows:

Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. The Dictionary of Real Estate Appraisal (5th ed., 2010).

Thus, this article discusses the usual selling price of the fee simple interest in an owner-occupied large free standing store real property, unaffected by the person who owns or uses the property.

II. Big Box Stores Are All Built To Suit And Not Built To Thereafter Be Sold Or Leased.

The above section of this article addressed the legal principles governing the TCV of big box stores and other types of property. This section addresses ways in which big box stores are factually unlike most property types. Big boxes are all built to suit or custom built for a specific retailer’s business. They are either constructed by (1) a retailer or (2) for a retailer pursuant to a pre-construction contract whereby the retailer agrees to lease the property after construction under terms that allow the contractor to recover its costs and profit. Unlike many property types (apartment complexes, shopping centers, warehouses, office buildings, houses, etc.), big box stores are never built for the purpose of selling or leasing after construction is completed.

Although this gets us ahead of the story, the question should be asked why, unlike many other property types, are big box stores not built to thereafter be sold or leased. The answer is quite simple. Big box retail stores are custom built to accommodate a particular user’s image and marketing strategies. For reasons discussed below, no one could reasonably expect to profit from custom construction of a big box store and thereafter selling or leasing it in the market.

Although an existing big box store is most often clearly suitable for retail use by another retailer, the market tells us a buyer of the fee simple interest in an existing big box store, at a minimum, is going to make substantial modifications to the property. One not familiar with sales of fee simple interests in big box stores will ask why after sale of the fee simple interest in a big box store are big box store buildings either demolished or substantially modified when the building was suitable, as is, for retail use. The answer is that each big box store retailer has its own business image and desired store layout and design - façade, flooring, lighting, location of restrooms, etc. Each big box retailer wants all its stores to look alike and not like another retailer’s stores.

In short, the market tells us that when the fee simple interest in an existing big box store is sold or leased, one of two things almost always happens - (1) the building is demolished or (2) the building is substantially modified.

III. Valuation Of The Fee Simple Interest

Borrowing a quotation from the late William Kinnard, a professor, author, and well-known real property appraiser, “An appraisal is the logical application of available data to reach a value conclusion.” It is useful to keep this truism in mind when valuing property, including the fee simple interest in a big box store property.

A. Sales Comparison Approach.

In valuing the fee simple interest of a big box store by the sales comparison approach, ideal comparable sales are fee simple sales of similar properties, i.e. sales of the same interest in property as the interest in the big box store being valued.

The Michigan Tax Tribunal has consistently used comparable fee simple sales of properties that were vacant and available when valuing a subject big box store. See Home Depot USA, Inc. v. Twp. of Breitung, MTT Docket No 366428 (2012), affirmed by the Michigan Court of Appeals in an unpublished opinion, Home Depot USA, Inc., v. Twp. of Breitung, Michigan Court of Appeals Docket No. 314301, (April 22, 2014) (“Petitioner’s selected comparables were vacant and available at the time of sale. The Tribunal finds that these sales best represent the fee simple interest in the subject property. Vacant and available at the time of sale is not an alien term: an appraiser’s analysis of exchange value must account for this eventuality. Not all properties transition instantaneously from seller to buyer like a light switch. Moreover, vacant and available for sale does not automatically present a negative connotation.”) (Emphasis added.)

As the Michigan Court of Appeals further explained:

The tribunal properly valued the properties by valuing the fee simple interest of the properties as if they were vacant and available. By comparing the subject properties to similar big box retail properties that were vacant and available, with various adjustments made to compensate for differences between the properties, Allen [taxpayer’s appraiser] was able to determine what the fair market value would be of the subject properties, if they were to be sold in a private sale, as required by MCL 211.27(1). Therefore, Allen’s sales-comparison approach properly valued the TCV of the fee simple interest of the subject properties.

Below are some common issues and errors in concluding to the TCV of the fee simple interest in big box stores using the sales comparison approach:

1. Leased Fee Sales. A leased fee comparable may not be a valid indicator of a fee simple interest. Income producing real estate is often subject to an existing lease or leases encumbering the title. By definition, the owner of real property that is subject to a lease no longer controls the complete bundle of rights, i.e., the fee simple estate. The price paid for a leased fee sale is a function of the contract rent, the credit worthiness of the tenant, and the remaining years on the lease. If the sale of a leased property is to be used as a comparable sale in the valuation of the fee simple interest in another property, the comparable sale can only be used if reasonable and supportable market adjustments for the differences in rights can be made. The Appraisal of Real Estate, p. 323 (13th ed.); p. 406 (14th ed).

2. Sale - Leasebacks. Sale/Leasebacks are typically financing transactions and always transactions between related parties, i.e. in addition to seller and buyer, the parties are tenant and landlord to each other. Thus, a price paid for a sale/leaseback comparable sale is typically based upon a financial transaction not reflective of the fee simple interest value and is always a transaction between related parties.

3. Expenditures after sale. Misapplication of reimaging costs as “expenditures made immediately after purchase” results from failure to make a logical application of available data.

a. It is appropriate to adjust a comparable sale price for expenditures that “have to be made” when such expenditures do not have to be made for the subject property

b. It is not appropriate to adjust for expenditures made after the sale to “reimage” or customize the big box store for the buyer’s specific business purposes. An adjustment for a buyer’s expenditures after sale are erroneously included when the subject has the same or similar physical features and condition because both the comparable sale and the subject would typically be modified to satisfy the buyer’s business plan and image.

4. Zoning and Deed Restrictions. Real property in Michigan is restricted in use by zoning. Other means of restricting a property’s use also exist. One is deed restrictions. A deed restriction, like a zoning restriction, may have a negative effect on a property’s value. However, like a zoning restriction, a deed restriction may not affect a property’s value. Where a deed restriction exists on a comparable sale property, it is appropriate to determine if the restriction caused a diminution in price when considering using the sale as a comparable sale to value a subject big box store property. However, typically when big box stores sell with a deed restriction, the restriction is negotiated as part of the sale so as to not affect the buyer’s intended use of the property and does not affect the sale price for the property.

5. Highest and Best Use Issues. The highest and best use (“HBU”) of an existing owner-occupied big box store is likely going to be for retail use. In valuing big box store real property by the sales comparison approach, ideally each improved comparable sale would have the same or a similar HBU as the improved subject property. The Appraisal of Real Estate, p. 43 (14th ed. 2013). A big box store comparable sale not purchased for the subject’s same or similar HBU (retail) should be investigated to determine what evidence it provides about the value of the subject big box store property.

For example, if the improved comparable sale is physically comparable and suitable for retail use but the property sells for a use other than retail, the sold property’s HBU (as reflected by the sale) may not be even similar to subject’s HBU - retail. When that sale is used as a comparable sale without adjustment for this fact (but appropriate other adjustments), its use may result in overvaluation (but not an undervaluation) of the subject. If the comparable sale property suitable for retail use was offered for sale in the market and not bought for retail use, then the comparable property’s selling price for retail use (the subject property’s HBU) would have been equal to or less than its selling price for some other use - this is simply a logical application of available data.

B. The Income Approach.

The most contested issue involving the valuation of the fee simple interest in big box stores by the income approach is typically the determination of market rent. To the extent the Tribunal has relied on the income approach to value these properties, it has considered only arms length transactions between unrelated parties resulting in agreed upon rent for an existing building not rent for a non-existent store to be built to a tenant’s specifications. The subject of this article is existing big box stores and not stores to be built. Rental terms from build-to-suit leases and sale/leaseback transactions would not reflect market rent (except by accident). Similarly, landlord provided tenant improvements or tenant improvement allowances so the tenant can reimage or reconstruct space for its business purposes must be adjusted from stated rent for a rent comparable so that the concluded market rent is for the subject property as is (without additional rent that may be realizable by the landlord for providing for more than the subject property, e.g. a landlord provided tenant improvement allowance).

C. The Cost Approach.

1. The Cost Approach to value big box store properties is generally agreed to by appraisers to be inapplicable due to the fact that it is not used by buyers and sellers and because of issues relating to the quantification of total depreciation. If used, then replacement cost is the basis from which all depreciation must be deducted. Quantifying this depreciation including, proper functional obsolescence and external (economic) obsolescence determinations, typically must be done through information obtained through comparable sales and/or income approach:

2. Comparable Sales can be used to derive market extracted depreciation.

3. Income deficiency or capitalization of rent loss (the difference between rent at market and the rent required to justify investment based on cost new) can also be used.

Big box store real property TCVs are adversely impacted by substantial obsolescence. The question has been asked why do the fee simple interests in big box store properties sell for so little as a % of cost new? There are multiple explanations for this market fact which are generally applicable regardless of the property’s age:

a. All freestanding big box stores are custom built for the original owner’s business purposes and business model and the modified cost for a buyer’s business model/image is expensive.

b. Upon sale, at a minimum, there is modification for reimaging (when the building is not demolished). (Sometimes the modification is for a use other than retail.)

c. Fast growing e-commerce sales - In general, even big box retailers are not building new stores and when they are building, they are generally constructing smaller stores.

Significantly, the loss in value attributable to these obsolescence factors further explains why build-to-suit lease rental rates will typically be at rental rates above the market rental rate for an existing big box store property.

IV. Summary

In conclusion, the logical application of available data is required to answer the question: As of the valuation date, what is the usual selling price that would be paid for the fee simple interest in the subject existing big box store property?

The usual selling price is most appropriately determined from fee simple interest sales of similar existing properties and through market rent based on rents agreed to for other similar existing properties. The cost approach is generally not used. But when it is used, it would not likely provide a reliable result unless sales and/or income approaches to value are used to account for total depreciation.

districts in Ohio and Pennsylvania can come in and file their own tax appeal to raise the value of a given property." Landlords must diligently review property taxes yearly, looking at assessments based on current marketplace ' conditions, Shapiro says. "My clients are fighting assessments," he said, "because assessors were ignoring the function obsolescence of their properties, which in some cases meant a 50 percent reduction in value."

Michael Shapiro is of counsel at the Michigan law firm Honigman Miller Schwartz and Cohn LLP. The firm is the Michigan member of American Property Tax Counsel, the national affiliation of property tax attorneys. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

Assessors Often Overvalue Centers, Ignoring Vacancies and Other Issues

"Landlords must diligently review property taxes yearly, looking at assessments based on current marketplace conditions."

Most shopping center owners are being overtaxed and do not even know it. Or they do not realize it until they get their tax bill. The problem is in the way taxes are figured by local assessors- a methodology that was only adequate, at best, during good times, but which has become a severe handicap to landlords during this lengthy economic downturn.

In most states assessors take a mass appraisal approach, trying to determine as quickly and ubiquitously as possible the fair market value of all the shopping centers within a tax district using existing data. The assessor is looking at the market value of the property based upon fee-simple value, which is the value of the real estate without encumbrances - that is, what it would sell for if it were vacant and available for sale or lease at market rates.

"The reality is, there are few cases of commercial property selling where you have a vacant building for sale without encumbrances," said Kieran Jennings, a Cleveland-based partner at Siegel, Siegel, Johnson & Jennings. "Typically, it is partially occupied, fully occupied, et cetera. Often there are deed restrictions in place." Jennings is a member of the Washington-based American Property Tax Counsel, which assists property owners in the U.S. and Canada with tax issues.

"Assessors will look at a market, they will review published sources on cap rates, et cetera, to come up with a model that will be used on shopping centers across the board," said Darlene Sullivan, a partner at Austin, Texas-based Popp, Gray & Hutcheson, and also a member of the APTC. "They have to get their numbers out quickly and apply the model without looking specifically into any condition."

Assessments are levied in similar fashion in Michigan. "In Michigan, as in most states, value is based on market as opposed to contract rent," said Michael Shapiro, a Detroit-based partner at Honigman Miller Schwartz and Cohn, and an APTC member. "In general, the assessor uses a cost approach that has not adequately accounted for obsolescence in the market, reduced demand for property, greater vacancies and increased cap rates. All these factors have a negative impact on value. "There are two general ways overtaxing occurs. The first is the time-lag effect of a slumping market, and the second involves the lease adjustments often made to keep tenants in place, but which assessors do not take into account.

Indiana landlords were being victimized by the calendar until laws there were changed, says Stephen Paul, an Indianapolis-based partner at Baker & Daniels and an APTC member. "Our assessment date is a year behind our value date," Paul said. "For example, the assessment date was March 1, 2009, but the valuation date was January 1, 2008, and the market changed dramatically. On March 1, 2009, market conditions were worse than at the value date. People were taxed currently, but based on values when the market was much better."

The more common failure in tax assessments is the inflexibility of assessors or their inability to consider the lease inducements necessary to keep tenants. "I have a number of clients that are regional and local shopping center owners," said Jennings. "Since the fall of the real estate market, there has been tremendous pressure on them to keep tenants in place. So they have gone from net leases to gross leases, put in buildouts and removed square footage."

All these things mean that actual rents are less than what they appear to be to the assessor. Jennings gives one example where tenants will stay in place, but take up less space. To keep tenants, landlords will allow them to halve their space, which means they have effectively cut income in half. "Now when the assessors come along, they see all of your storefronts are occupied, but many of the tenants have reduced space," said Jennings. ''The landlord has pockets of dead space that will probably never be used again. The assessor is assessing you at rents that are $15 to $20 a square foot, but only half that space is being used, so the effective rent is really $7.50 to $10 a square foot. And it is not showing up in any published data, and assessors can only work from what is published."

That problem rarely gets rectified because, for competitive reasons, shopping center owners are reluctant to share information, which means, of course, that the assessors are working from incomplete data. "Shopping center owners are not amenable to giving out information to assessors," said Paul. "The landlord doesn't want to give out the details of a lease, so the assessor will say: 'If I'm not entitled to look at the lease, I have to make my own assumptions, which will be done on incorrect information. Afterward the taxpayer has to file an appeal against the assessment and layout the reasons why it was excessive."

Overtaxing is a problem not just for the shopping center owners, but for the tenants as well. Most leases are triple-net, which means that taxes are passed through to tenants, so a lower tax will benefit the tenant in the end, Sullivan says. "Tenants need someone to be aggressive for them to keep those triple nets down," she said.

This can also be problem with competitive shopping centers. Consider two similar shopping centers across the street from each other, each with the same type of vacancy. One center is valued at $100 per square foot, and the other at $130 per square foot. Because of triple net, tenants will be enticed to the center taxed at the lower rate, because all things considered, the expense of leasing will be lower.

An assessor equipped with nothing more than the cost approach will find it difficult to quantify value losses without going through a detailed income approach, something that assessor is going to lack the time to do. Most appeals processes will recognize this and adjust accordingly.

In Michigan when an appeal is filed, the parties generally get together and discuss the specifics, and usually the matter is resolved without a hearing or trial, says Shapiro. "We have handled many shopping center appeals, and in recent years we have not gone to trial on a shopping center. Some get resolved while preparing for trial, and some get resolved when a formal, independent appraisal is submitted.

"Not every place is so easy. In Ohio and Pennsylvania third parties such as school systems have joined the fray: fighting to keep assessments high because so much funding comes from levies. Lower assessments mean less revenue for the school districts. "In the event, you are able to convince the assessor to reduce taxes based on, say, half the leased space used," said Jennings. "The school districts in Ohio and Pennsylvania can come in and file their own tax appeal to raise the value of a given property." Landlords must diligently review property taxes yearly, looking at assessments based on current marketplace ' conditions, Shapiro says. "My clients are fighting assessments," he said, "because assessors were ignoring the function obsolescence of their properties, which in some cases meant a 50 percent reduction in value."

Darlene Sullivan is a partner with the Austin law firm of Popp, Gray & Hutcheson LLP, the Texas member of the American Property Tax Counsel (APTC). She can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

Stephen H. Paul is a partner in the Indianapolis office of Faegre Baker Daniels, the Indiana member of American Property Tax Counsel, the national affiliation of property tax attorneys. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

Kieran Jennings is a partner with the law firm of Siegel & Jennings, which focuses its practice on property tax disputes and is the Ohio and Western Pennsylvania member of American Property Tax Counsel, the national affiliation of property tax attorneys. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

Michael Shapiro chairs the tax appeals practice group at Michigan law firm Honigman Miller Schwartz and Cohn LLP. The firm is the Michigan member of American Property Tax Counsel, the national affiliation of property tax attorneys. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

"The tax credits threaten to reduce tax revenue to the state. To minimize lost revenue, taxing entities are attempting to limit use of the tax credits for industrial personal property by seeking to reclassify many of those assets as commercial..."

By Michael Shapiro, Esq., as published by National Real Estate Investor - online, August 2010

Detroit, along with the rest of Michigan is wrestling with two major tax issues that frequently involve litigation and have costly implications for owners of commercial and industrial properties. The first issue relates to the fact that the applicable tax statute in Michigan treats industrial properties differently than office, retail, hotel and other commercial properties.

Starting with the 2008 tax year, the Michigan legislature granted Michigan Business Tax credits to owners of industrial personal property. These credits are intended to offset property taxes and reduce the tax rate levied on industrial personal property.

As the accompanying chart indicates, for the 2009 tax year, Detroit's rate for commercial personal property was $70.92 per $1,000 taxable value (generally 50% of market value). Meanwhile, the personal industrial property rate was $59.14 per $1,000, effectively reduced to $38.44 per $1,000 by the Michigan Business Tax credits.

The tax credits threaten to reduce tax revenue to the state. To minimize lost revenue, taxing entities are attempting to limit use of the tax credits for industrial personal property by seeking to reclassify many of those assets as commercial.

The Michigan Department of Treasury recently announced that it filed almost 10,000 property tax classification cases affecting 2009 property taxes. In addition, state officials have encouraged local communities to file classification appeals in the State Tax Commission for 2010, all with the intent of changing property classifications from industrial personal property to commercial personal property.

Raw deal for industrial owners

Many of the actions have been initiated by the state or local jurisdiction based solely on the name of the owner, and without regard to the actual use of the property or the property's legal classification. If a company's name is Joe's Manufacturing, it will not have a classification action brought against it, whereas Joe's Warehouse will be the subject of such an action.

Because the law involved is relatively new, most taxpayers receiving notice of these appeals have little to no idea what the action involves.

At the heart of the issue is the definition of industrial personal property, and the statute is reasonably clear that personal property located on industrial real property is industrial personal property.

Notwithstanding the statute, the state and State Tax Commission claim that the use of personal property governs its classification and that personal property has to be used for manufacturing or processing in order to be deemed industrial. There is nothing in the applicable statute to support that position, however.

The classification appeals recently filed make it apparent that the state and State Tax Commission recognize their claims may not prevail. As a result, in more recent filings they are seeking to change the classification of the underlying real estate from industrial to commercial.

It appears that most actions by the State Tax Commission and the State have been taken without any property specifics other than the name of the owner. If those reclassifications succeed, then the personal property at the site would also be redefined as commercial and not industrial personal property.

Taxpayers affected by such actions should consult with competent property tax counsel for advice on whether to defend such claims and, if so, how to proceed. In some instances, the government may have missed a critical deadline, which will give taxpayers an additional basis for prevailing.

Backlog of appeals

The second source of property tax litigation in Detroit and other Michigan communities is shared by thousands of property owners across the country. Nearly everywhere in the United States, property values are depressed by as much as 40% or more from where they were before the onset of the recession in December 2007.

And just like local governments in other states, Michigan's taxing entities are strapped for cash and reluctant to voluntarily lower valuations to reflect current market conditions. It's no surprise that thousands of property owners have appealed assessments in hopes of lowering their property tax bills.

What may be surprising to property owners who haven't already filed an appeal is that an unprecedented deluge of valuation protests has slowed down the panel that reviews them. As of July 31, there were approximately 2,600 non-small-claims cases pending before the Michigan Tax Tribunal for the 2008 tax year, and another 5,600 cases for 2009. Approximately 3,900 such new cases have been filed in 2010.

The tax tribunal recently adopted new procedures and is laboring to reduce this backlog and expedite the time it takes cases to move from filing to resolution. Most property tax practitioners applaud the tribunal's recent efforts in this regard. Even so, for anyone considering an appeal, it makes sense to start the process sooner rather than later and get in line to have the case heard.

Michael Shapiro chairs the tax appeals practice group at Michigan law firm Honigman Miller Schwartz and Cohn LLP. The firm is the Michigan member of American Property Tax Counsel, the national affiliation of property tax attorneys. HE can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

"To support inflated values, taxing units attempt to narrowly define the highest and best use of the property."

By Michael Shapiro, Esq., as published by National Real Estate Investor, December 2007

In many states, the war over property tax assessments based on "value to the owner" as opposed to "market value" has ended with a clear victory for market value. Nonetheless, some jurisdictions continue to try changing this outcome by misusing "highest and best use."

Assessors' attempts to misuse highest and best use can be seen most often in buildings used by big-box retailers and manufacturers, as opposed to properties such as hotels, office buildings and shop-

ping centers, typically valued using the income approach.

To support inflated values, taxing units attempt to narrowly define the highest and best use of the property. They claim that a taxpayer's comparable sales aren't evidence of market value because the sale properties have a different highest and best use than the property being assessed.

Two methods, two results

An assessor may contend, for example, that only stores purchased by Jones Corporation can be used to value a store used by Jones Corporation. This effectively eliminates comparable sales as a basis for valuation. One tax court addressed this issue when it held that a property's highest and best use cannot be defined "so narrowly that it precludes analysis and value based on market data."

The accompanying chart demonstrates the difference between the assessor's valuation of two big-box stores based on his narrow definition of highest and best use and the actual selling price of those same stores in the open market.

The assessor defined highest and best use as that use being exercised by that specific retailer. That definition led the assessor to value big-box store No. 1 at $62 per sq. ft. and big box store No. 2 at $58 per sq. ft. Actually, store No. 1 sold to another retailer for $49 per sq. ft. and store No. 2 was bought by a different retailer for $38 per sq. ft.By narrowly defining highest and best use, the assessor ignored market data and over assessed the property.

The relevance of a comparable sale's highest and best use was addressed in the case of Newport Center v. City of Jersey City. The New Jersey Tax Court held that a comparable sale should be admissible evidence of value, regardless of its highest and best use, if the claimed comparable sale provides logical, coherent support for an opinion of value.

Many jurisdictions want to effectively reinstate value to the owner, in legal terms called "value-in-use," as the lawful standard for property tax valuations, thereby inflating assessments by eliminating from consideration the sales-comparison approach to value. In the sales comparison approach, sales often provide the best indication of a big box or manufacturing property's market value.

Sales prices reflect loss in value from replacement cost due to obsolescence. That obsolescence generally includes a significant amount of external obsolescence, which represents loss in value caused by some negative influence outside the property.

For example, external obsolescence could result from limited market demand for a big-box store or manufacturing plant built to meet the needs of a specific user. Value may also be adversely influenced by functional obsolescence, a loss in value due to design deficiencies in the structure, such as inadequate ceiling heights, bay spacing or lighting.

What's a comparable sale?

Appraisers are taught to only use sales comparables with the same or similar highest and best use to that of the property being appraised. However, even this limitation is too restrictive.

For example, years ago a former automobile assembly plant was offered for sale and eventually sold for demolition and construction of a shopping center. No automobile manufacturer, or for that matter any other manufacturer, was willing to pay more for this property than the developer who bought it to build a shopping center.

Thus, the market spoke and defined the market value of the former automobile plant. In short, if a property is physically similar to the property being valued, but sells for an unusual use, that sale should not necessarily be disregarded as a comparable sale.

The sale of the former automobile assembly plant for use as a shopping center may not be the ideal comparable sale to value industrial property. However, that sale certainly puts a cap, or limit, on the value of a similar industrial facility, subject of course to adjustments for relevant differences such as location or size.

By understanding the issues involved in using comparable sales to achieve market value assessments, taxpayers can successfully appeal property tax assessments when they are based on the misuse of highest and best use.

Michael Shapiro is a partner in the law firm of Honigman Miller Schwartz and Cohn LLP, the Michigan member of American Property Tax Counsel (APTC). He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it..

​Savvy commercial owners are employing use restrictions as a means to reduce taxable property values.

Most property managers and owners can easily speak about their property's most productive use, in addition to speculating on a list of potential uses. Not all of them, however, are as keenly aware of their property's...